Do you know the CTR to your LP? Does it have a good CR%?
To somebody new to the affiliate space, reading that sentence could be like reading a foreign language. Acronyms, while often helpful, can sometimes lead to confused communication (and a Google search on the sly). That’s why it’s important to stay up-to-date with the latest industry terminology, and subsequent shorthand, to ensure you understand and are aware of everything that could impact your business.
There are new people are joining the world of affiliate marketing everyday, and, for those without prior advertising or marketing experience, there can be a significant learning curve. That’s why we compiled a list of the most important acronyms you need to know when first venturing into the world of affiliate marketing.
ROI – Return on Investment (return/cost)
What it is: A measure of profitability that compares what you’re spending to what you’re earning.
Why it matters: Optimizing for a greater ROI means you’ll make more money. You never want a negative ROI, because that means you’re losing money.
CPC – Cost Per Click (cost/clicks)
What it is: How much you pay each time someone clicks your ad, determined by the bid you place. This is the same thing as PPC (pay per click).
Why it matters: In general, you want this cost to be low. However, if your CPC is too low, you may need to bid more competitively to increase volume, especially for keywords or targets that convert well.
CPV – Cost Per View (cost/views)
What it is: How much you pay for each impression to your landing page or for each video view, determined by the bid you place. With CPV, you pay per one impression as opposed to CPM, where you pay per thousand impressions. This is the same thing as PPV (pay per view).
Why it matters: Similar to CPC, you want this cost to be low, but bids for high-performing keywords and targets should be competitive.
CPM – Cost Per Mille (cost/[total impressions/1,000])
What it is: How much you pay when 1,000 people see your ad, determined by the bid you place. (Fun fact: Mille means 1,000 in Latin).
Why it matters: Like CPC and CPV, you want your CPMs to be low enough to cut down on spend, but competitive for keywords that convert well.
CTR – Click-Through Rate (clicks/impressions)
What it is: CTR is the percent of people who click your ad. You can measure CTR for an ad, keyword or target, and an entire campaign.
Why it matters: CTR is a good measure of engagement and relevancy. A keyword with a low CTR suggests your ad or offer isn’t particularly relevant to the keyword. Similarly, an ad with a low CTR may not be engaging enough to entice someone to click. While a higher CTR often correlates with higher conversion rates, that isn’t always the case. When you’ve got high CTRs on a CPC campaign that isn’t converting, it’s a red flag.
CR% – Conversion Rate (clicks or impressions/conversions)
What it is: A conversion refers to when somebody does what you want them to do. Example: You want people to sign up for a company newsletter. CR% refers to how many people could have signed up for a newsletter divided by how many people actually signed up for a newsletter.
Why it matters: Aside from ROI, this is arguably the most important metric for an affiliate marketer to optimize. When someone converts on your offer, you earn revenue. Revenue is good, so in theory, you want a higher conversion rate. However, if you’re spending more than you’re earning to increase your CR%, your ROI will suffer. Like CTR, you can look at CR% to gauge how relevant and engaging a keyword or ad is in relation to your offer. Ads and landing pages with high CR% are engaging enough for someone to convert.
CPL/CPA – Cost Per Lead or Action (cost/conversion)
What it is: How much you pay when someone signs up for whatever you’re promoting, determined by the bid you place. Typically, lead-generation offers use CPL/CPA pricing models.
Why it matters: When someone converts on your lead-generation offer by signing up for a service or performing some other specific action, you make a profit. Lower bids mean you’re spending less, but you’ll sometimes need to bid higher to get the volume you need for acquiring leads. Like the other pricing models, (CPC, CPV, and CPM), bidding for the best ROI is a balancing game.
CRO – Conversion Rate Optimization
What it is: Making changes to your campaign in an effort to increase CR%. While there are countless CRO strategies you can employ, there’s no one right way to do this, which is why some campaigns succeed and others fail. You could, for example, pause keywords that don’t convert well and increase bids for keywords with higher CR%s, or test two different landing pages to see which converts better.
Why it matters: Getting conversions, and subsequently increasing ROI, is the whole point of affiliate marketing. Continuously analyzing performance data for insights and testing changes to your campaign will help you make informed decisions when you optimize.
CTA – Call to Action
What it is: A compelling phrase, usually with an imperative verb, instructing the desired action (for example, “Download Now” or “Sign Up Today!”). You’ll usually find CTAs on ads and landing pages.
Why it matters: A clear CTA tells your audience exactly what to do next, leading them down the funnel toward conversion. It’s a good idea to test CTA variations to identify which convert best.
LP – Landing Page
What it is: A page that promotes your offer. When someone clicks your ad, the link opens your landing page. Linking an ad to a specific landing page is better than linking to a homepage. For example, an ad for women’s boots that links to an online store’s homepage can be more confusing than linking the ad to a page with an assortment of women’s boots.
Why it matters: Landing pages have a lot of room for optimization. You can tweak the look and feel, language, content, and more to optimize for conversion. The more you test and optimize your landing page, the more you can increase your CR%.
RON – Run-of-Network
What it is: Targeting all sites in a network to get traffic at a lower cost. When cheap volume takes priority over where your ad is shown, you should consider a RON campaign.
Why it matters: Depending on the goal of your campaign, you may just need eyeballs on your offer. Maybe you’re trying to improve brand awareness across the board, or run your ads across the web to identify the best places to reach with your target demographic.
RTB – Real-Time Bidding
What it is: Connecting supply (areas your ad can be shown) and demand (your ad) in a real-time auction. When someone visits a website that could potentially show an ad, an RTB platform can select the ad to display on the page in real-time. Affiliate marketers set bids for impressions on the sites they want their ad to be shown, and the RTB platform hosting the auction selects the winning ad based on the bid price.
Why it matters: RTB is an efficient way to match ads with inventory. As an affiliate marketer, you can adjust your bids based on the competition to get more volume on sites that convert well.